Two Scoops - By Evan Hammonds

The holiday cheer still lingers, the trips to the gym haven’t yet slowed to a crawl, and we’re whistling past the mailbox dreading the day the Visa bill arrives. Until then we are thinking of the better days ahead in 2017…and there are two things that tell us of good things to come.

News from the National Thoroughbred Racing Association on Dec. 29 figures to be a very big deal for this year and beyond. The announcement of proposed regulations from the Department of the Treasury and the Internal Revenue Service that clarify “the amount of the wager” in the document “Withholding on Payments of Certain Gambling Winnings” may dramatically boost handle on Thoroughbred racing.

More than two years in the making, the 31-page document took a lot of hard work by the NTRA in our nation’s capital.

In short, the regulations allow the entire amount wagered into a specific pari-mutuel pool to be the base for reported winnings, not just the winning ticket amount. BloodHorse’s Frank Angst described it best in his “Keeping Pace” blog posted New Year’s Eve:

“Under the current method, a $1 trifecta wheel of 10 horses is viewed as 10 bets of $1 each. If a payout of $600 or more at odds of 300-1 or higher follows, the payout must be reported to the IRS. If that same wager pays $5,000 or more on odds of 300-1 or higher, money from the winnings must be withheld for taxes.

“The rules changes would affect the 300-1 threshold. Now the $10 ticket in the scenario above is considered a $10 wager. To reach 300-1 odds, the payout must now be more than $3,010, which means far fewer big payouts will need to be reported.

“More significantly, because it immediately takes money out of people’s pockets, players who spend $100 on 100 combinations in a Pick 4 that pays $7,500 will not face withholding. While the payout exceeds $5,000, it no longer is a 300-1 proposition because the wager amount will now be considered to be $100 instead of $1. To reach 300-1 odds, the payout would have to reach $30,000.”

While a 90-day period for public comment follows before the rules become official, we expect it to stand.

We can’t stress enough what a huge step forward this is for the sport. For the high-end player who pushes as much as seven figures a year through the windows, the liquidity issue is key, allowing for a larger bankroll to continue to “churn” through the system. A lift of upward of 10% or more in national handle is not out of the realm of possibility.

The other game-changing event is the Pegasus World Cup Invitational Stakes (G1) at the end of January. Say what you will, but Frank Stronach has always been about innovation with his racetrack properties since he purchased Santa Anita Park in 1998 and Gulfstream Park the following year, and the Pegasus is another example of that.

While the race—worth $12 million—and its participants who had to buy shares to gain entry, remains a moving target as we speak, the amount of publicity generated has been a lift for the sport at a time of year that usually focuses on last year’s achievements with the Eclipse Awards. Each day seems to bring a news break of horses entering, horses exiting, owners buying shares to get in, and owners looking to find partners.

Regardless of the outcome of the race, the creativity, the ability to get it off the ground, and the cooperation of its shareholders is to be commended.

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